Canada’s Tangerine utilises customer data to disrupt status quo

By David Beach | 8 November 2018

As the impact of GDPR continues to ruffle feathers with the European data protection supervisor, Giovanni Buttarelli, told Reuters to expect fines “by the end of the year.”

While GDPR has profound consequences in Europe, its tremors are also provoking debate across the Atlantic. Justin Trudeau and StatCan were thrust into the data privacy spotlight in October following the national statistic authority’s request to access the banking data of 500,000 randomly chosen Canadian customers.

But effective data insight and sharing can be put to good use to the benefit of the consumer, as the Open Banking initiatives in various European countries would attest.

Canadian challenger Tangerine Bank put improved data insights at the heart of their personal finance management (PFM) tool in order to differentiate among the country’s big five banks.

“We fight tooth and nail to disrupt the status quo,” says the bank’s vice president of client experience, Mark Nicholson. “We’re reimagining banking for our clients and helping them make long term financial decisions by helping them strategize goals and link them to budget. That is where we differentiate, in the digital client experience,” he says.

The 23 year old bank - or “mature fintech” according to Nicholson - competes over all products and services with a single and simple offering within each category, wholly focused on the client experience.  

Providing the technical juice behind the enhanced digital experience is data enrichment fintech, Meniga, which recently announced their partnership with Tangerine, though development has been ongoing for many months.

“We use Meniga’s rich data aggregation to recommend to our clients how best to take on their goals” says Nicholson. “We found that Meniga had a strong categorisation engine that set them apart from other contenders while also having a robust API that allowed us to leverage their technology while also implementing our strategy,” he says.

Meniga, based in Iceland, have been afforded a “kick start” in the Open Banking era of enriching PFM products through data aggregation, using the small Icelandic market as testing ground.

“We’ve had API Open Banking in Iceland for nine years now,” says vice president of product at Meniga, Finnur Magnusson, “we have 90% of Iceland’s banking customers through partnerships with the three main banks who all have shared back offices.

“It’s allowed us to move faster than others in the space and put us in a great spot. We’ve been aggregating data and we’ve been learning from the data aggregation, data clean up and data enrichment here in Iceland,” says Magnusson, though he was quick to add that Open Banking and API culture isn’t quite as prolific in continental Europe.

“It can sometimes be frustrating to get meaningful projects up and running at European banks. They struggle internally between various departments and it can take 2-3 years to materialise in the bank’s interfaces,” says Magnusson.

For Tangerine’s Nicholson, it gives Meniga a real advantage having feet in both a small interconnected market as well as the wider European market.

“It’s great to get the level of insight on something that’s been tested and learned within the Icelandic market that can be applied into ours,” says Nicholson. “They act as real proof points that although they don’t correlate one to one but it gives the ideation a degree of validation.

“The cultural alignment was also very strong. We’re very committed to help clients make smarter financial decisions and so are Meniga,” says Nicholson.

But enabling smarter financial decisions on the part of the client is not necessarily aligned with maximising profit, particularly in areas of credit. Nicholson believes this is an old way of thinking where long term banking relationships pay out far better.

“Our first priority is to get clients to pay off high interest debt,” says Nicholson. “As a bank, that might not be within our best P&L interest, but we see greater value for money in the longer term banking relationship with that client than through credit. It’s about building the trust that we’re putting their best interest first.

“For Tangerine, the ideal personalised banking experience is mutually beneficial. The bank will earn money where it makes sense and we won’t where it doesn’t. Our clients will grow their affluence over time by us helping them make better decisions.

“Ultimately, the desire for our organisation is one where there is a healthy check and balance between spending and long-term saving,” he says.

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